What do you want to know
- You know that clients can work after age 65.
- You know that retirement income is often taxable.
- New customers should know this too.
Suppose your client does not have enough savings for retirement.
Research shows that the average American has $95,776 saved for retirement and 1 in 3 Americans have no retirement savings.
If this sounds like your new client’s typical situation, you might consider recommending several options, including working through retirement, downsizing from home, or delaying applying for Social Security benefits.
You also need to make sure clients are aware of the potential costs of nursing and long-term care, even if it scares them.
You may need to educate your clients about the need to adjust their savings withdrawal rate as they age.
With your support, careful planning, and a willingness to commit to the plan, they can secure a comfortable retirement.
Of course, an important consideration is the goals. Retirement can mean many different things to people.
For some clients, it will be time to travel and spend time with family. For others, it will be time to start a new business or start a charity.
Whichever approach clients intend to take, here are nine things about retirement that might surprise them.
1. There is no age limit on when clients can retire.
In the past, most people retired around age 65. However, retiring later in life has recently become more common.
In fact, there is no age limit on when clients can retire.
As long as clients have the financial means to do so, they can retire at any age.
2. Retirement income may be taxable.
Clients may have to pay taxes on their retirement income, depending on their type of account.
If clients have a traditional IRA, they may have to pay taxes on the money they withdraw in retirement based on their overall income.
If they have a Roth IRA, they will owe no tax on the money they withdraw.
To you, this is probably old news. For new customers, this might be shocking.
3. They may need to adjust their withdrawal rate.
The 65+ population is the fastest growing age group in the United States and has grown 34.2% over the past decade.
The percentage of money they can safely withdraw from their retirement account each year depends on several factors, including the size of their nest egg and how long they expect to live.
However, as a general rule, they should not withdraw more than 4% of their nest egg each year.
4. They should consider delaying their social security.
Some new clients might dream of retiring and applying for Social Security benefits as soon as possible, but they will receive a reduced benefit if they start collecting Social Security benefits at age 62.
For example, suppose their full retirement age is 67 and they start receiving benefits at age 62. They will only receive 70% of their monthly benefits.
If they wait until they are 70 to start collecting their benefits, they will receive 132% of their monthly benefit.
The average Social Security retirement benefit is $1,536 a month, or about $19,000 a year.
The maximum possible Social Security benefit for someone retiring at full retirement age in 2020 is $3,345 per month or $39,000 per year.
5. Don’t forget the cost of nursing homes.
Most health insurance plans don’t cover the cost of long-term care, such as the cost of a nursing home.